The year 2014 has passed and we’re well into the start of the New Year. Early indications would lead us to believe that the local real estate market in 2015 may be very different from the twelve months that preceded it. Let’s start by looking in the rear view mirror...
Closed sales in Monroe County were down 2.8% last year. Specifically, 7,605 residential properties transferred title vs. 7,824 sales in 2013. Meanwhile, median sales prices were more or less flat. Last year, the median price for a home that sold in Monroe County was $129,900 while, in the year before, the median price for a home was $130,000. Not much news there. However, there were a few trends that we saw last year that were, if nothing else, interesting. Chief among them was the disappearance of the first time home buyer. This segment of the market traditionally represents 40% of all sales. Last year, only 28% of the market was attributed to purchases made by first time buyers. Student loan debt, a difficult job market, a mortgage application process that was less friendly toward first time buyers, and a tendency on the part of Millennials to remain living at home with mom and dad- all of these contributed toward the drop in young buyers entering the market. Well, all things change and it seems as though first time buyers have returned to the market this year with a vengeance. Student loan debt has been paid down, unemployment numbers have improved, FHA has revised some of their more harsh and unbending criteria, and an incredible 1.7 million new households were formed last year. All of this portends a more robust and competitive market for homes listed for sale below $200,000.
The other characteristic or trait that helped to define last year’s real estate market was, well, the normalcy of the market. It seems that so much of the sturm und drang that characterized the market during the recession has been waning and, finally, this past year, seems to have dissipated. There were fewer bankruptcies, fewer mortgage disapprovals, less gnashing of one’s teeth, and sales due to divorce seemed to have declined. In short, it was a less emotionally taxing environment for both buyers and sellers and, I’m glad to report, a less draining environment for agents! This probably has a lot to do with the fact that neither buyers nor sellers controlled the market. In other words, the market seemed to be one in which there were an equal number of buyers and sellers. The fact that property values didn’t go up or down certainly helps to substantiate this. I know that I speak for many when I say that we look forward to more normalcy!
If you've been reading my newsletters the past few years, this next paragraph will sound familiar. My apologies, in advance. However, the phenomenon of “condition” remains one of the great factors that determines whether a client will successfully sell their home or, instead, find themselves stuck with an unwanted property six months after entering the market. Buyers simply don’t have the time or the interest to renovate the house that you’re trying to sell. Buyers are interested in buying a home not a project. Investors buy projects and will pay accordingly. As this mindset further embeds itself into the DNA of home buyers, we've begun to witness some interesting behavior on their part. The most dramatic experience that we've seen is one in which a buyer will walk into a property that is available for sale. The moment that they step foot into a room that has wallpaper, they turn on their heels and walk out. Literally. Walk out of the house without saying a word. As a seller, remember, you’re in control of your destiny! If you don’t want your home to linger on the market or if you don’t want your property sold for pennies on the dollar, please consider an aesthetic enhancement to your property. The algorithm that we've described in the past few years remains constant. For every dollar that you’re investing in a cosmetic enhancement, you can assume that that you’ll receive $1.50 to $2.00 in return. That’s big money! Consider it!
As I gaze into the future, what do I portend for the local market in the coming months? More likely than not, we’re going to enjoy a stronger market. More than a million new jobs were created in the United States in the past three months. The national unemployment rate is currently 5.7% while local unemployment numbers are pegged at 5.4%. Both are expected to continue to drop. Consumer confidence is at its highest level in more than 7 years. This index surged from 93.1 in December to 102.9 in January. Gas prices have dropped so significantly that the average American family can now expect to save $1,000 in the coming year on auto fuel. Interest rates continue to touch historic lows. At the moment, they’re at their lowest level in more than two years. A 30 year mortgage can be secured for 3.66%! Fifteen year mortgages? 2.98%! Finally, the stock market, despite a 3% drop in the month of January, has surged, once again, in the past few days. In the near future, the only real concern that most economists site is the well-being of the world economy. Thankfully, it seems that the US economy is strong enough that, even if the European Union, Japan, or China enter a recessionary period, we should be fine. Still with me?? In short, all of this bodes well for both buyers and sellers in the coming year! If you’re interested in entering the market this coming season please consider giving us a call!